Bright Horizons Family Solutions Inc.

Greetings and welcome to the Bright Horizons Family Solutions fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Michael Flanagan, Vice President of Investor Relations. Please go ahead.

Thanks, Paul, and welcome to Bright Horizons' fourth quarter earnings call. Before we begin, please note that today's call is being webcast, and a recording will be available under the investor relations section of our website, investors.brighthorizons.com. As a reminder to participants, any forward-looking statements made in this call, including those regarding future business, financial performance, and outlook are subject to the safe harbor statement included in our earnings release. Forward-looking statements inherently involve risk and uncertainty that may cause actual operating financial results to differ materially and should be considered a conjunction of with the cautionary statements that are described in detail in our earnings release, 2024 Forum 10-K, and other SEC findings. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statements. Today, we will also refer to non-GAAP financial measures, which are detailed and reconciled to the GAAP counterparts in our earnings release, which is available in the investor relations section of our website at investors.brighthorizons.com. Joining me on today's call is our Chief Executive Officer, Stephen Kramer, and our Chief Financial Officer, Elizabeth Bolin. Stephen will start by reviewing our results and provide an update on the business. Elizabeth will follow with a more detailed review of the numbers before we open it up to your questions. With that, I'm going to turn the call over to Stephen.

Thanks, Mike, and good evening to everyone on the call. I am pleased to report a strong finish to 2025, closing out a year of solid growth and continued progress across the business. In the fourth quarter, revenue increased 9% to $734 million, and adjusted EPS increased 17% to $1.15, both ahead of our expectations. For the full year, we delivered revenue of $2.93 billion, up 9% over the prior year, and adjusted EPS of $4.55, representing 31% growth year over year. These results exceeded the expectation shared at the beginning of the year and highlight the continued evolution of Bright Horizons into a diversified, integrated solutions provider of employer-sponsored education and care. The improvements in our business mix throughout 2025, combined with our growing impact on families and employers, reinforce our confidence in the durability of our model and long-term opportunity for growth. Let me now walk through the segments. First, backup care again delivered strong growth and earnings contribution in Q4 as it has done over the course of 2025. In Q4, revenue increased 17% to $183 million, driven by solid utilization across center-based, in-home, and school-age programs. Utilization during the quarter reflected a combination of unplanned care when regular arrangements were disrupted, along with more predictable care needs such as scheduled school breaks and holiday coverage. For the full year, backup care revenue grew 19% to $728 million and sustained strong operating margins. Our service reach spans more than 1,100 employer clients and millions of eligible employees globally. Importantly, our existing clients had double-digit growth in backup users, even as their eligible populations remained relatively flat. meaning growth was driven by deeper penetration into the eligible population, underscoring the value of the benefit to an increasing number of working families. Looking forward, our focus remains on scaling the backup business by expanding unique users within existing clients, increasing frequency of use among those utilizing care, and continuing to retain and add new employer clients. This growth relies upon an unmatched delivery model that combines own capacity across our full-service centers and backup operations alongside a broad third-party provider network. With still well less than 10% penetration within existing clients, we have a significant opportunity to further expand active user adoption and utilization through targeted marketing, expanded capacity across use types, and our One Bright Horizons initiatives to increase awareness across our services. We remain confident that backup care will continue to be a durable source of growth and earnings, while also strengthening broader employer partnerships across Bright Horizons services. Turning to full service, revenue increased 6% in the fourth quarter to $515 million, with growth driven by a combination of tuition increases and enrollment growth, tempered by our continued portfolio rationalization. We added six new centers this quarter, including four client centers, three of which were transitions of management for Stormont Vale Health and Cone Health. These additions extend our leadership in employer-sponsored childcare and reaffirm the critical role onsite care plays in supporting working families and their employers. Enrollment in centers open for more than one year increased approximately 1% in the fourth quarter, and occupancy averaged in the mid-60% range, broadly consistent with seasonal patterns we typically see in the back half of the year. Underlying enrollment dynamics remain similar to what we saw throughout 2025, with solid demand in many geographies, countered by more muted enrollment growth levels in some of our more challenged areas. We are pleased to see continued progress, particularly in our lower occupancy cohort, where centers operating below 40% occupancy declined from 16% to 12% of the portfolio in the fourth quarter year on year. Specifically in the UK, our full-service business continued to make progress and delivered positive operating profit for the year, a significant milestone post-pandemic and a meaningful turnaround from the 30 million of annual losses we absorbed just two years ago. This progress reflects higher occupancy, more consistent staffing, and improved affordability for families aided by expanded government supports. Looking ahead, our focus remains on serving families where they work and live, continuing to invest in the quality of our services, and strengthening the long-term economics of our portfolio. We will continue to operate in locations that are important to our client partners, are strategic in delivering backup care, and in areas with strong supply-demand dynamics. At the same time, we'll continue to rationalize locations where these characteristics are not present. Turning to Ed Advisory, revenue increased 10% to $36 million in the quarter, and for the full year, grew 9% to $125 million, both ahead of our initial expectations. College Coach led the growth in margin performance as more families engaged with our college counseling services, while EdAssist also continued to expand its participant base. During the quarter, we added new employer clients to the portfolio, including launches with Samsung, Estee Lauder, and Becton Dickinson, among others. Before I turn it over to Elizabeth, I want to take a moment to recognize an important milestone. 2026 marks the 40th anniversary of Bright Horizons. When our founders launched the company in 1986, they believed employers could play a meaningful role in supporting working families and that doing so would benefit children, parents, and employers alike. Over four decades, Bright Horizons has developed thoughtfully alongside changes in the workforce, employer priorities, and the needs of working families. Central to that evolution has been the development of our backup care business and the expansion of our services to support families and employees across life and career stages, broadening our impact to a much wider population. That progression reflects our ability to listen to clients, adapt to changing needs, and invest in ways to maximize impact, all while remaining grounded in our mission to support children, families, and employers. We are proud of what this organization has built over four decades, deeply grateful to our employees whose dedication make it possible, and appreciative of our client partners and customers who place their trust in us. In closing, 2025 was a year of solid financial performance and meaningful progress across many dimensions of our business. We grew revenue 9%, expanded adjusted operating margins, 200 basis points, and delivered 30% earnings growth. We strengthened our balance sheet, repurchased 225 million of shares, and positioned the company for long-term success. As we look ahead to 2026, we are optimistic about the opportunities in front of us and look to build on the momentum we saw in 2025. Elizabeth will walk through the guidance in more detail, but at a high level, we expect revenue to be in the range of 3.075 billion to 3.125 billion, and adjusted EPS to be in the range of $4.90 to $5.10 per share. With that, I will turn the call over to Elizabeth.